Why Not Paying Property Taxes Is Riskier Than Missing Mortgage Payments

Performance Property Real Estate Question

Q: Gerald, my brothers and sisters and I inherited my parents house and I just realized my sister has not been paying the property taxes like she was supposed to.  I fell behind on my mortgage before and was able to modify my mortgage loan.  Can we do the same thing in this situation?  Annette, Linden, NJ

A: Annette, unfortunately, municipal liens take precedence and subordinate even mortgage liens and the tax lien foreclosure process is faster and much more unforgiving than the foreclosure process is for delinquent mortgages where borrowers enjoy much more consumer protections.  My first suggestion is that you get a payoff from the local tax collector where your parents’ home is located so you know exactly how much money is owed in property taxes.  I would then speak with your brothers and sisters and determine whether you can collectively payoff the outstanding property tax liens.  If you can afford to pay off the outstanding tax liens, I suggest you do so as soon as possible before the interest on the liens piles up any more and the tax lien foreclosure process kicks in or continues any further.  If you can’t pay off the property tax lien or get a loan to pay off the liens, you may need to consider selling the property so you don’t lose the equity in your parents’ home before the property is foreclosure on.  Good luck, Annette and thanks for your question.

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